Premier League now considers new £200 million loan for Championship clubs

The Premier League has proposed a new £200m loan for Championship clubs as part of a bailout deal for the EFL, Sportsmail understands, but there is still no firm deal on the table for sides facing ruin due to coronavirus.

The latest move is designed to prevent second tier teams going bust, but this turn in the long-running saga has left clubs exasperated that there is no firm offer on the table.

And they are concerned that the bailout is dependent upon loans they fear they will not be able to pay back.

‘It’s not a bailout is it?’ one club told Sportsmail. ‘It is just paying for today, with tomorrow’s money.

Football League clubs are concerned there is still no firm bailout offer from the Premier League

‘And there is still nothing on the table for the clubs as we speak.’

Only this week, MPs on the Department for Culture Media and Sport Select Committee savaged the chief executive of the Premier League, Richard Masters, and the chairman of the EFL, Rick Parry, for failing to reach an agreement on support for ailing clubs eight months after the coronavirus gripped Britain.

The committee chairman, Julian Knight, suggested that the efforts to support clubs, some of which are facing financial disaster, have ‘a degree of farce about them”.

And there was no immediate sign of improvement when all 72 clubs met on Thursday to be briefed on the latest situation.

In the latest discussions Championship clubs may be given access to a £200m loan fund

‘Even now there are still a lot of questions and it is not actually on the table,’ said the club source.’

Previous discussions have broken down because while there was an offer to League One and Two, there was nothing for the Championship. The EFL as a whole rejected the proposal.

‘The Premier League have now come and said they are exploring a £200m loan,’ said another club. ‘It would be repayable.’

The offer, if it is forthcoming, would create a loan fund, but this would be reimbursed from regular payments made by the Premier League to the EFL

Masters however stated that he believed the Premier League had kept their promise

Richard Masters stated that he believed the Premier League had kept its promise to EFL

Rick Parry was questioned by the committee over what support the EFL required

Rick Parry was questioned by the committee over what support the EFL required

Hence, a club that took a loan would have their money docked each season thereafter.

It would potentially create a problem if a team accepted a loan in the Championship and was relegated, because the payments they would receive in League One are much lower and that could make it difficult to pay back.

The chairman of Department for Digital, Media, Culture and Sport committee, Julian Knight

The chairman of Department for Digital, Media, Culture and Sport committee, Julian Knight

It is believed that only those clubs that do not have the financial clout to pay their own way would be eligible for the scheme.

EFL clubs are particularly dependent on matchday income, which makes up to one third of their total revenues, but that has collapsed during the pandemic because fans are not allowed in grounds.

At the same time, clubs have to pay players, staff and stage matches.

The offer to the lower divisions remains unchanged with £20m in grants and £30m in loans.

However, a number of clubs pushed back and asked Rick Parry to go again to the Premier League and ask for all of the money to be available in grants, since sides fear they cannot repay the loans.

Already eight lower league sides are receiving life support loans from the EFL and that is expected to rise to 20 at Christmas.

Eight clubs are receiving life-support loans from the EFL to enable them to pay wages

Eight clubs are receiving life-support loans from the EFL to enable them to pay wages

Presumably, Rick Parry would be happy to comply with the request from his members.

He told MPs on Tuesday: ‘We would much prefer the money coming to League One and Two was all grant rather than loan. We are not enthusiastic about stacking up new debt because that just pushes the problem further down the road.’

But the Premier League have shown no sign of budging.

Richard Masters told the politicians: ‘I do not think that the government has insisted that we underwrite matchday losses. That would not be consistent with what government is doing for other sectors.

‘We have committed no clubs will go out of business because of COVID-19 related losses this season. We believe the amount of money we are putting into league One and Two in grants and loans… is enough to secure the future of the clubs.’

Clubs in England's lower leagues have struggled financially, especially during the pandemic

Clubs in England’s lower leagues have struggled financially, especially during the pandemic

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